Owning a small business can be risky at times. You or your team might commit several errors, especially while dealing with the insurance sector. Having a good knowledge of filing commercial insurance claims can minimize your chances of such mistakes and prevent you from violating your policy’s terms. This article discusses the common commercial insurance claim errors.
Understand Your Policy
The first and most important thing is to read and understand the policy agreement carefully. Do not rush over it, nor assume that something is covered.
Claim within the Set Time
Most providers require policyholders to act quickly after damages occur. Some policies even have a 48-hour time limit to report a loss.
Document Relevant Details
Ensure that you keep records of all the damaged property, including value, cost, and amount of loss. Photographs, videos, and documents of the damaged items are accepted as proof. Also, as a policyholder, you are advised to document any communication between you and your insurance company. This includes the time and date of the discussion as well.
Keep Any Damaged Items
Don’t be in a rush to dispose of damaged items, even after you might have photographed them. You may need to show physical evidence of a damaged vehicle as proof of loss before you can claim commercial auto insurance coverage.
Notify the Police
Where the mode of damage constitutes a crime, you must notify the police. For example, if your business vehicle is stolen, you should first inform the police before making a commercial auto insurance claim.
Always File a Claim Instead of Offering to Pay Out-of-pocket
If someone sustains an injury on your property, do not offer to pay for damages out-of-pocket instead of making a claim. Such an act is usually prohibited in general liability policies.
Work with Your Insurance Company
You are expected to cooperate with the requirements of your provider by following the rules and terms of the policy.
Never Admit Liability
Never admit that you are at fault when damage occurs because it could lead to a lawsuit. Most insurance companies warn against this.
How Commercial Property Is Valued
Here are the two ways your provider will value your commercial property for payout:
- Actual Cash Value: The actual cash value is how much the damaged item is worth at the time of damage. Your provider makes this estimation by calculating the cost and subtracting the depreciation. This type of coverage costs less because the worth would have depreciated over time.
- Replacement Value: The replacement value is the cost to replace a damaged or stolen property with a new one. Policyholders tend to pay higher rates for this protection because it would cost the provider more than the actual cash value.
Common Mistakes to Avoid When Buying Business Insurance
Here are three common mistakes to avoid when purchasing a commercial insurance policy.
- Never leave out workers’ compensation. Most states mandate business owners to have workers’ comp, regardless of the size. Businesses with one or more employees are expected to purchase this coverage.
- Purchase general liability insurance (GLI). There is a misconception that forming a Limited Liability Company can exempt you from getting GLI.
- Review your policies regularly to ensure that it fits your specific needs and that you have adequate coverage at all times.
After you have identified your specific needs, it is time to check quotes from various providers. Action Insurance Group offers reliable and affordable business insurance policies customized to your requirements. Contact us to get a commercial insurance quote now!
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